Question:
What is Finance?
Answer:
Mobilization
of funds from surplus economic unit & deployment of funds to deficit
economic units
Question:
What is Financial Instrument?
Answer:
Financial
instruments are the financial claim of holder against issuer.
Question:
What is Cash Flow?
Answer:
A measure of a company's financial health, equals
cash receipts minus cash payments over a given period of time.
Question: What are the different types of Ratios?
Answer:
· Profitability ratios (Gross Profit Margin, Net profit margin, Operating profit margin, ROA, ROE)
· Liquidity ratio (Current ratio, Quick ratio)
· Asset Utilization Ratios (Inventory Turnover, Account Receivable Turnover)
· Debt Utilization Ratios (Debt to equity, Debt to total assets)
· Coverage Ratios (Debt Service Coverage ratio, Interest service Coverage Ratio)
Question:
What is Current Ratio?
Answer:
Ø An indication of a company's
ability to meet short-term debt obligations; the higher the ratio, the more
liquid the company is. It is calculated as:
Current Ratio = Total Current
Assets/Total Current
Liabilities
Ø In general, a Current ratio
of 2 : 1 is accepted by most creditors.
Question: What is
Quick
Ratio?
Answer:
Ø A measure of a company's
liquidity and ability to meet its obligations. Quick ratio, often referred to
as acid-test ratio,
Acid-Test (Quick) Ratio = ( Total Current Assets –
Stock)/ Total Current Liabilities
In general, a
quick ratio of 1 or more is accepted by most creditors.
Question:
What is EBITDA?
Answer:
Ø EBITDA stands for Earnings
before Interest, Taxes, Depreciation and Amortization.
Ø An approximate measure of a
company's operating cash flow based on data from the company's income
statement. Sometimes also called operational cash flow.
Question:
What is EBIT?
Answer:
EBIT stands for Earnings before Interest and Taxes.
A measure of a company's earning power from ongoing operations, equal to
earnings before deduction of interest payments and income taxes.
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